Druckenmiller Leads Family Offices Boosting US Bank Stock Bets

(Bloomberg) -- Stanley Druckenmiller’s family office led investment firms for the world’s rich in boosting allocations to US bank shares last quarter, putting them in line to profit from a rally in financial stocks.

The billionaire’s Duquesne Family Office added almost a dozen US banks, including Wall Street giant Citigroup Inc. and regional lender KeyCorp to its holdings in the quarter ended Sept. 30, according to its 13F filing. That was the largest allocation by sector during the period for the New York-based firm’s new investments.

The move was part of a broader trend. George Soros’ family office increased its allocation to First Citizens BancShares Inc., which acquired Silicon Valley Bank’s assets out of bankruptcy last year amid a US regional banking crisis that saw stocks plummet. And Cercano Management, a multifamily office once part of Microsoft Corp. co-founder Paul Allen’s private investment firm, added JPMorgan Chase & Co and Bank of America Corp.

The moves positioned some of the world’s largest family offices – provided the kept those allocations – to reap the benefits from the surge in bank stocks on Donald Trump’s presidential election win this month. Investors have wagered the industry is set to be a key beneficiary of his promise to lower taxes and cut regulations.

Trump has vowed to lower the corporate tax rate to as low as 15%, from 21%, and to eliminate 10 regulations for every new one during his campaign — offering a more attractive environment for banks than his rival Kamala Harris, who had planned to increase corporate taxes.

He’s also promised sweeping changes to the country’s regulatory bodies, adding to a string of good news for US bank bosses who had already been optimistic in recent months about navigating a falling interest-rate environment and the Federal Reserve’s ability to pull off a soft landing for the economy. Overall, that’s all helped push the 24-company KBW Bank Index up almost 40% so far this year. It’s up 9.6% since the Nov. 5 election, while an index of smaller US regional lenders has jumped 11%.

Druckenmiller, 71, also added allocations to US regional lenders M&T Bank Corp., Truist Financial Corp. and Citizens Financial Group Inc. worth more than $30 million overall at the end the last quarter, filings show. His biggest new investment in the period by market value was a roughly $116 million holding in an exchange-traded fund tracking the performance of US regional banks.

Former Barclays Plc Chief Executive Officer Bob Diamond said late last month that he sees consolidation in the US banking industry as the biggest investment opportunity in the US. That’s after a string of regional lenders collapsed last year.

Soros Fund Management, meanwhile, boosted other investments in the US finance sector through buying a stake in Rithm Capital Corp., the owner of asset manager Sculptor Capital Management, adding to a portfolio that already included holdings in JPMorgan and Lazard Inc.

Druckenmiller and Soros, 94, have a net worth of about $10 billion and $6.5 billion, respectively, according to the Bloomberg Billionaires Index.

Money managers overseeing more than $100 million in US equities have to file a 13F form within 45 days of the end of each quarter to list their holdings in stocks that trade on US exchanges. It offers one of the few glimpses into how hedge funds and some large family offices invest.

Other highlights from 13F filings include:

--With assistance from Marion Dakers and Todd Gillespie.

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